Lesson 2 Workers Compensation & Employers Liability Insurance Policy

Transcription

1 Lesson 2 Workers Compensation & Employers Liability Insurance Policy Lesson 2 WC & EL Intro p1 (2IC) Prior to the passage of workers compensation statutes, the only recourse an injured employee had was to sue his/her employer. This process was not working. Job-related injuries and deaths were increasing, and many employees and their families were driven to financial ruin because of the inability to collect or the time required to collect damages from an employer. Finally, public pressure forced change, and many states began enacting basic workers compensation statutes. By 1934 all states had approved workers compensation statutes, and a system to compensate injured workers was created. In this lesson, we will study how the Workers Compensation and Employers Liability Insurance Policy gives an employer protection for claims arising out of employee injuries. Lesson 2 WC & EL Intro p2 (2IC) This lesson will consist of six topics: 1. Statutory Considerations 2. Workers Compensation Information Page 3. Workers Compensation Insurance 4. Employers Liability Insurance 5. Other States Insurance 6. Endorsements Lesson 2 WC & EL Intro p3 (2IC) Lesson 2 Learning Objectives 1. Briefly explain the purpose of workers compensation laws. 2. Name and describe the four types of benefits provided by workers compensation statutes. 3. Name the monopolistic states and explain how to obtain workers compensation insurance coverage in those states. 4. Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. 5. Briefly explain the information contained in Item 4 of the Information Page. 6. Describe payments not covered in Part One-Workers Compensation Insurance. 80

2 7. Briefly describe the purpose of Part Two of the Workers Compensation and Employers Liability Insurance Policy. 8. Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. 9. Describe the need for employers liability insurance coverage in monopolistic states and the types of coverages available. 10. Understand the provision for Other States Insurance under Part Three of the Workers Compensation And Employer Liability Insurance Policy. 11. Describe the uses of specific Workers Compensation Insurance and Employers Liability Insurance endorsements. Lesson 2 WC & EL Intro p4 (2IC) Forms that you need to print for this lesson: Workers Compensation And Employers Liability Insurance Policy - WC B Information Page WC A Forms you have printed and will need for this lesson None 81

3 Lesson 2 Topic A Statutory Conditions p1 (2IC) Lesson 2 Topic A - Statutory Considerations Learning Objective: Briefly explain the purpose of workers compensation laws. Today's workers compensation insurance is tied to state statutes. All fifty states, the District of Columbia, and Puerto Rico have their own laws governing workers compensation. The specific benefits and provisions of workers compensation acts vary from state to state. In this topic, we will not study specific state benefits. We will study the workers compensation system that creates the need for Workers Compensation and Employers Liability Insurance Policies. Liability Insurance as it applies to: Covered employment Workers Compensation Benefits Insurance Requirements Monopolistic States Lesson 2 Topic A Statutory Conditions p2 (2IC) Learning Objective: Briefly explain the purpose of workers compensation laws. Covered Employment & Workers Compensation Benefits Covered Employment Each state law stipulates which employees must be covered by workers compensation. Most employees fall under these laws. However, certain employees such as agricultural employees or domestic employees may be exempt, and, in many states, employees of a business with less than a stipulated number of employees are exempt. You should consult your own state's law for the specifics in your state. Workers Compensation Benefits Generally speaking, workers compensation statutes mandate statutory benefits that must be paid when an employee is injured on the job. They provide an exclusive or sole remedy. The employer assumes the cost of injuries and disease that arises out of and in the course of employment. The employer pays a known cost (the insurance premium) for the exposure. The employee benefits by 82

4 timely delivery of benefits in the greatest majority of cases. Lesson 2 Topic A Statutory Conditions p3 (2IC) Learning Objective: Name and describe the four types of benefits provided by workers compensation statutes. Covered Benefits Four Types of Benefits Provided Under Most Workers Compensation Statutes Medical Expenses Medical expenses are the costs for medical treatment of an injured or sick employee who is covered by the state law. States rarely impose a dollar limitation on medical expenses but may stipulate that expenses must be reasonable and necessary. Disability Income Lost wage benefits are paid to replace the loss of income suffered by an injured or sick employee who is covered by the state law. State law will define the types of and the amount of the benefits. These payments are not designed to be a full replacement of the injured workers lost pay. They are usually subject to minimums and maximums. All states have a waiting period of some type before these benefits are paid. Rehabilitation Expenses Most states have rehabilitation benefits written into their statutes. Every state pays for physical rehabilitation, and some states provide for vocational rehabilitation subject to time and/or dollar limits. In many cases, these benefits include related expenses such as travel and lodging. Death Benefits If an employee's death arises out of and in the course of employment, a death benefit is payable. These benefits include funeral expenses and may also include weekly income benefits for the employee's eligible dependents. 83

5 Lesson 2 Topic A Statutory Conditions p4 (2IC) Learning Objective: Name the monopolistic states and explain how to obtain workers compensation insurance coverage in those states. Insurance Requirements & Monopolistic States Insurance Requirements All states, except New Jersey and Texas, require that employers carry workers compensation insurance. New Jersey law requires that if an employer rejects workers compensation, they must purchase employers liability insurance. In most states, workers compensation insurance is provided by insurance companies, competitive state funds, or self-insurance, if allowed under the statute. Monopolistic States A monopolistic state is one in which an employer can purchase workers compensation only from the state. The four monopolistic states are North Dakota, Ohio, Washington, and Wyoming. Puerto Rico and the U.S. Virgin Islands also have monopolistic workers compensation insurance programs. However, the monopolistic state fund does not provide employers liability insurance. The method to provide employers liability insurance coverage in these jurisdictions will be discussed in Topic D. Lesson 2 Topic A Statutory Conditions p5 (2IC) Learning Objective: Name the monopolistic states and explain how to obtain workers compensation insurance coverage in those states. Monopolistic States The monopolistic states are North Dakota, Ohio, Washington and Wyoming. 84

6 Lesson 2 Topic B Information Page p1 (2IC) Lesson 2 Topic B - Information Page Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Refer to the Workers Compensation And Employers Liability Insurance Policy Information Page. The Information Page is included as part of the Policy. This page is not only informational; it also defines some of the coverage provided by the Workers Compensation and Employers Liability Insurance Policy. Please look at this page now, which you should have printed at the beginning of this lesson. We will look at each item separately. Click this link to view the Information Page. As you can see in the Policy, the Information Page is organized into Items. These items show: Item 1 - The named insured is listed here. If a partnership is listed, partners are also insureds, but only in their capacity as employer of the partnership's employees. The mailing address is also shown here as well as all other work locations of the named insured. Item 2 - Indicates the policy period. 85

7 Lesson 2 Topic B Information Page p2 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Information Page continued Item 3 This is probably the most important part of the Information Page. It consists of four parts which we will review now. Item 3.A Workers Compensation Insurance Item 3.B Employers Liability Insurance Item 3.C Other States Insurance Item 3.D Endorsements and schedules Lesson 2 Topic B Information Page p3 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Information Page continued Item 3.A This item triggers, or activates, Workers Compensation Insurance for your named insureds. In this space, you list all of the states where the named insured has known operations. This activates benefits under the compensation laws of those listed states. The named insured should list all states where the named insured has known operations or where the named insured expects to have operations. Tip: Monopolistic states cannot be listed in item 3.A. 86

8 Lesson 2 Topic B Information Page p4 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Item 3.B This section triggers Employers Liability Insurance (Part Two of the Workers Compensation And Employers Liability Insurance Policy) for those states listed in Item 3.A. Item 3.B. also indicates the Limits of Liability for Employers Liability Insurance. The standard limits for this coverage are: 1. $100,000 (bodily injury by accident) Each Accident 2. $500,000 (bodily injury by disease) Policy Limit 3. $100,000 (bodily injury by disease) Each Employee Tip: You can increase these limits for a corresponding premium adjustment. Lesson 2 Topic B Information Page p5 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Information Page continued Refer to the Workers Compensation And Employers Liability Insurance Policy Information Page. Item 3.C This item triggers Coverage-Part Three of the Policy: Other States Insurance. An employee may suffer employment-related injury or disease where workers compensation benefits of another state would apply, and the employer may be responsible for providing those benefits. If a named insured begins work in one of the states listed here after the effective date of the Policy and no other insurance applies, the Policy responds as if the 3.C. state were a 3.A. state. Tip: Monopolistic states cannot be listed in item 3.C. 87

9 Recommended wording for this Item follows: "All states, other than North Dakota, Ohio, Washington, Wyoming and the states listed in Item 3.A. of this Information Page." Not all of your companies will be willing to use this wording. You should request it on the policies that you write so that your named insureds will have broad coverage for their possible out-of-state exposure. Remember, if work is taking place in a state when the Policy goes into effect or renews, that state must be listed in Item 3.A. We will look at some of the provisions of Other States Insurance in Topic E. Lesson 2 Topic B Information Page p6 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Information Page continued Item 3.D Policy endorsements and schedules are listed in this section. Lesson 2 Topic B Information Page p7 (2IC) Learning Objective: Explain the coverages activated in Items 3.A., 3.B., and 3.C. of the Workers Compensation and Employers Liability Insurance Policy Information Page. Item 4 Workers Compensation And Employers Liability Insurance Policies are based on payrolls assigned to risk classifications that describe the work the employees perform for the named insured. You will see a classification code with a brief description of the work assigned to that code. Some examples include, caterers, dry cleaning and laundry store-retail and route supervisors, drivers, law office employees such as clerical workers, messengers and drivers. In this section, the Policy lists the appropriate classifications, the estimated payroll figures, the rates, and 88

10 the estimated annual premium for the named insured. Please refer to the end of Lesson 2 Topic B to complete Self Quiz7 at this time. 89

11 Lesson 2 Topic C - Workers Compensation Insurance Coverage Lesson 2 Topic C Workers Compensation Insurance p1 (2IC) Learning Objective: Describe the Insuring Agreement located in Part One of the Workers Compensation Insurance and Employers Liability Policy. Refer to page 1 of the Workers Compensation And Employers Liability Insurance Policy. Coverage Part One: Workers Compensation Insurance deals with how the Policy makes the payments mandated by state worker compensation laws. This topic addresses: Workers Compensation Insurance Insuring Agreement Payments Not Covered The wording of the Workers Compensation And Employers Liability Insurance Policy is shorter, but no less important than the other policies you have studied. It is important for you to understand what this Policy says so that you can provide service to your agency's clients. Click the image on Lesson 2 Topic C Workers Compensation Insurance p1 (2IC) to view page 1 of the Policy. Lesson 2 Topic C Workers Compensation Insurance p2 (2IC) Learning Objective: Describe the Insuring Agreement located in Part One of the Workers Compensation Insurance and Employers Liability Policy. Workers Compensation Insurance Insuring Agreement Refer to page 1 of the Workers Compensation And Employers Liability Insurance Policy. How This Insurance Applies On page 1 of your Workers Compensation And Employers Liability Insurance Policy, at the top of the second column, you will see, A. How This Insurance Applies. This is the insuring agreement for workers compensation insurance, which says the Policy will pay for: Bodily injury by accident occurring during the policy period 90

12 Bodily injury by disease caused by or aggravated by conditions of employment We Will Pay Paragraph B. We Will Pay informs us that the insurer will "pay promptly when due the benefits required...by the workers compensation law". The Workers Compensation And Employers Liability Insurance Policy does not list the specific benefits or the amounts payable under the law. It merely says the Policy will comply with whatever the law requires. The named insured has this coverage for those states listed in Item 3.A. of the Information Page of the Policy. The meaning of Workers Compensation Law can be found on page 1 in the General Section of the Policy. Paragraphs C, D, and E address the right and duty to defend, supplementary payments and other insurance provisions. Lesson 2 Topic C Workers Compensation Insurance p3 (2IC) Learning Objective: Describe payments not covered in Part One-Workers Compensation Insurance. Payments You Must Make Refer to page 2 of the Workers Compensation And Employers Liability Insurance Policy. "You" in this paragraph means the employer named in Item 1 of the Information page. On page 2 of 6, look at Paragraph F. This section identifies four types of payments in excess of benefits that are not going to be covered by the Policy. They are: 1. Payments required because of the serious and willful misconduct of the named insured. 2. Payments required for an employee who the named insured knowingly hired in violation of law. F. Payments You Must Make You are responsible for any payments in excess of the benefits regularly provided by the workers compensation law including those required be-cause: 1. Of your serious and willful misconduct; 2. You knowingly employ an employee in violation of law; 3. You fail to comply with a health or safety law or regulation; or 91

13 4. You discharge, coerce or otherwise discriminate against any employee in violation of the workers compensation law. If we make any payments in excess of the benefits regularly provided by the workers compensation law on your behalf, you will reimburse us promptly. Example 1: The state indicates this type of worker who is injured is entitled to two times the normal benefits. The Policy does not pay the penalty portion of the benefits. A restaurant hires a 14-year-old employee to clear tables when state labor laws clearly indicate the workers must be at least 16 years old. Lesson 2 Topic C Workers Compensation Insurance p4 (2IC) Learning Objective: Describe payments not covered in Part One-Workers Compensation Insurance. Payments You Must Make continued Refer to page 2 of the Workers Compensation And Employers Liability Insurance Policy. 3. Payments required when the named insured failed to comply with a health or safety law or regulation. Example: OSHA fines Montgomery Construction Co. $10,000 for failing to follow safety regulations for constructing walls which leads to a worker's injury. The Policy pays the required workers compensation benefits, but the Policy does not pay the fine. 4. Payments required when the named insured discharges, coerces, or otherwise discriminates against any employee in violation of the state's workers compensation law. Example: Jones Corp. discharges an employee for making a workers compensation claim. The employee successfully sues for wrongful termination, resulting in $100,000 judgment for wrongful termination plus $4,757 in compensation benefits. The Policy will pay for the benefits but not for the judgment. 92

14 For all of the "Payments You Must Make", the provision adds a statement requiring the named insured to reimburse the insurance company for any payments in excess of benefits regularly provided by the workers compensation law. 93

15 Lesson 2 Topic D - Employers Liability Insurance Lesson 2 Topic D Employers Liability Insurance p1 (2IC) Learning Objective: Briefly describe the purpose of Part Two of the Workers Compensation and Employers Liability Insurance Policy. Refer to page 2 of the Workers Compensation And Employers Liability Insurance Policy. Coverage Part Two-Employers Liability Insurance provides coverage for the named insured's legal liability arising out of covered, employment-related injury or disease that is not covered as a workers compensation statutory benefit. This coverage is not controlled or mandated by state law. In this topic, we review the Employers Liability Insurance Coverage: Insuring Agreement Defense and Supplementary Payments Exclusions Lesson 2 Topic D Employers Liability Insurance p2 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement Refer to pages 2 through 3 of the Workers Compensation And Employers Liability Insurance Policy. Four Types of Employers Liability Claims Employers Liability Insurance will pay all damages for which a named insured is legally liable due to a covered employee's bodily injury. Four specific types of claims where permitted by law are indicated in Part Two. These claims are: 1. Third-Party-Claims or Third-Party-Action Over Claims 2. Dual Capacity Claims 3. Consequential Bodily Injury Claims 4. Loss of Care and Services Claims 94

16 Lesson 2 Topic D Employers Liability Insurance p3 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Four Types Of Employers Liability Claims Third-Party-Claims or Third-Party-Action Over Claims Employees cannot sue their employer for work-related injuries because the workers compensation coverage is the employee's sole-remedy of recovery. However, the employee can sue a third party, such as a manufacturer of the equipment, causing the injury or the owner of the premises where the injury occurred. If a named insured needs liability protection in a situation where he/she contributed in some way to the damages claimed, employers liability insurance coverage will apply. Lesson 2 Topic D Employers Liability Insurance p4 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Example of a Third Party Claim: An employee of Polly's Plastics is injured by a piece of machinery in the manufacturing plant. The employee collects workers compensation benefits and then also sues the manufacturer of the machinery in a products liability suit. The manufacturer looks to the Polly's Plastics for reimbursement and/or contribution because Polly's supervisor removed all of the safety guards from the machinery. 95

17 Lesson 2 Topic D Employers Liability Insurance p5 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Four Types Of Employers Liability Claims Dual Capacity Claims These claims are claims in which the employee sues the employer in some capacity other than that of employer, such as a manufacturer of a defective product, owner of a premises, etc. Note: Some states have restrictions on dual capacity lawsuits, and today this type of claim is rare. Lesson 2 Topic D Employers Liability Insurance p6 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Example of Dual Capacity Claims: An employee is injured while in the course of employment when a defectively manufactured ladder collapses. The employer is the manufacturer of that ladder. The employee files a workers compensation claim with the employer AND also sues his/her employer as the manufacturer of the ladder for the injury arising out of the defective product. Lesson 2 Topic D Employers Liability Insurance p7 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Four Types Of Employers Liability Claims 96

18 Consequential Bodily Injury Claims These claims involve bodily injury damages suffered by a family member arising out of the employee's jobrelated injury/disease. Example: The spouse of an injured employee suffers a heart attack upon learning of his spouse's lifethreatening injury. Note: Some states have limitations on consequential bodily injury claims. Lesson 2 Topic D Employers Liability Insurance p8 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Four Types Of Employers Liability Claims Care and Loss of Services (AKA Loss of Consortium) These are claims for damages suffered by a family member arising out of the loss of services that the injured/sick employee provided. Example: The child of an injured employee sues for loss of companionship and the loss of services provided by the parent, which resulted from the employee s injury. Lesson 2 Topic D Employers Liability Insurance p9 (2IC) Learning Objective: Describe the four types of employers liability claims indicated in Part Two Employers Liability Insurance. Insuring Agreement continued Although the frequency of the four described liability claims is low, the potential severity is high. This makes Coverage Part Two-Employers Liability Insurance important for your named insureds. 97

19 Lesson 2 Topic D Employers Liability Insurance p10 (2IC) Learning Objective: Describe the need for employers liability insurance coverage in monopolistic states and the types of coverages available. Employers Liability Insurance in Monopolistic States Monopolistic States In the monopolistic jurisdictions, workers compensation insurance does not include employers liability insurance coverage. In the event that an employer purchases workers compensation insurance from a monopolistic provider, they need to purchase employer's liability insurance. Options available for providing employers liability insurance for monopolistic states. Endorse a Workers Compensation and Employers Liability Insurance Policy written for nonmonopolistic states with an Employers Liability Coverage Endorsement; or Endorse a CGL Policy, if there is one, with a Stop Gap -Employers Liability Coverage Endorsement; or Purchase a separate policy with Employers Liability Insurance for the monopolistic state. Lesson 2 Topic D Employers Liability Insurance p11 (2IC) Employers Liability Insurance continued Exclusions We will not go over each of these exclusions in detail. However, you need to be aware of a few important points: 1. The Policy totally excludes contractual liability. There is no exception for "insured contract" as there was in the CGL Policy and the BAP. 2. There is no coverage for injuries that occur outside the United States, its territories, or its possessions, or outside Canada unless the employee is a resident or citizen of the United States or Canada and temporarily away from these countries. 3. Liability arising out of most federal acts or laws pertaining to employee injury is completely excluded. Defense and Supplementary Payments Since this is a liability coverage, the insurance company also has the duty to defend the named insured at 98

20 the company's expense. There are other provisions, similar to the CGL Policy. Please refer to the end of Lesson 2 Topic D to complete Self Quiz 8 at this time. 99

21 Lesson 2 Topic E Other States Insurance p1 (2IC) Lesson 2 Topic E - Other States Insurance Learning Objective: Understand the provision for Other States Insurance under Part Three of the Workers Compensation And Employers Liability Insurance Policy. Refer to page 4 of the Workers Compensation And Employers Liability Insurance Policy. Part Three of the Workers Compensation And Employers Liability Insurance Policy is Other States Insurance. An employee may suffer employment-related injury or disease where workers compensation benefits of another state apply. If a state is not listed in Item 3.A. of the Information Page, there is no Workers Compensation Insurance or Employers Liability Insurance for that state's laws. However, the employer may be responsible for providing those benefits and other costs. Lesson 2 Topic E Other States Insurance p2 (2IC) Learning Objective: Understand the provision for Other States Insurance under Part Three of the Workers Compensation And Employers Liability Insurance Policy. Other States Insurance continued By listing or describing a state in Item 3.C., Workers Compensation Insurance and Employers Liability Insurance is triggered if work should take place in that state. The work must begin after the effective or renewal date of the Policy. The named insured must inform the insurance company at once if they begin any work in any state listed in Item 3.C. The phrase at once is not defined in the Policy. A provision of Coverage Part Three-Other States Insurance says if a named insured has work on the effective date of the Policy in any state not identified in Item 3.A., no coverage will be afforded unless the insurance company is notified within 30 days from the effective date. Tip: It is important to ask your named insured to contact you if they begin work in any new location, regardless of where that may be. 100

22 Lesson 2 Topic E Other States Insurance p3 (2IC) Learning Objective: Understand the provision for Other States Insurance under Part Three of the Workers Compensation and Employers Liability Insurance Policy Other States Insurance Continued Julio's Art Gallery has a store located in San Antonio with future plans to expand in other states. Texas is listed under Item 3.A. of the Information Page and Arizona and New Mexico are listed under Item 3.C. The Policy has an effective date of March 1. Claim 1: Julio decides to open a new gallery in New Mexico on May 1. An employee hired in New Mexico is injured on August 1 and files for New Mexico benefits. Julio notifies the insurance company on August 2. Will the policy provide New Mexico benefits? The Policy will respond as New Mexico is listed under 3.C. and the work began after the effective date. Claim 2: Julio opens a store in Arizona on February 10. The Policy renews on March 1 with Texas and New Mexico listed under Item 3.A. and Arizona listed under Item 3.C. An employee hired in Arizona is injured on March 5 and files for Arizona benefits. Julio notifies the insurance company on March 6. Will the Policy provide Arizona benefits? The Policy will respond as Arizona is listed under 3.C. and Julio notified the insurance company within 30 days of the Policy's renewal date. Claim 3: The Information Page has been updated to include Texas, New Mexico and Arizona under Item 3.A. of the Information Page with California added under Item 3.C. Julio decides to open a store in Nevada instead of California in May. An employee hired in Nevada is injured on October 20 and files for Nevada benefits. Julio notifies the insurance company on October 22. Will the Policy provide Nevada benefits? Coverage will not be afforded for that state since that state was not listed under 3.A. or 3.C. of the Information Page. Please refer to Lesson 2 Topic E Other States Insurance p4 (2IC) to complete the Knowledge Check at this time. 101

23 Lesson 2 Topic F Endorsements p1 (2IC) Lesson 2 Topic F Endorsements Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Workers Compensation And Employers Liability Insurance Policies can be endorsed to tailor the Policy to meet a named insured's needs. Many states have amendatory endorsements that address cancellation and non-renewal notices. There are also multi-state endorsements that address coverages, exclusions, and premiums. Lesson 2 Topic F Endorsements p2 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Endorsements continued The endorsements that we discuss here and that apply to the Workers Compensation and Employers Liability Insurance Policies include: Employers Liability Coverage Endorsement WC C Longshore and Harbor Workers' Compensation Act Coverage Endorsement WC A Outer Continental Shelf Lands Act Coverage Endorsement WC B Maritime Coverage Endorsement WC A Foreign Coverage Endorsement State laws often exclude certain people from workers compensation coverage. Named or described individuals may be included for coverage when it is allowed under a state's workers compensation statute. Lesson 2 Topic F Endorsements p3 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. 102

24 Employers Liability Coverage Endorsement WC C This endorsement provides Employers Liability Insurance Coverage for states not included in the issued Workers Compensation And Employers Liability Insurance Policy. It is primarily used when workers compensation insurance is purchased in a monopolistic state fund. Ohio has its own specific endorsement, which is used only in Ohio. Click here to see a copy of this endorsement. WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC C Original Effective October 1, 2004 Advisory EMPLOYERS LIABILITY COVERAGE ENDORSEMENT This endorsement applies only to work in the states shown in the Schedule. States A. Part One (Workers Compensation Insurance) does not apply to work in a state shown in the Schedule. B. Part Two (Employers Liability Insurance) applies to work in states shown in the Schedule as though they were shown in Item 3.A. of the Information Page. C. Part Two (Employers Liability Insurance), C. Exclusions is changed by adding these exclusions. This insurance does not cover: 13. bodily injury to an employee when you are deprived of common law defenses or are subject to penalty because of your failure to secure your obligations under the workers compensation law of any state shown in the Schedule or otherwise fail to comply with that law. Schedule 103

25 Notes: 1. Use this endorsement to afford employers liability insurance in any state, including monopolistic state fund states, with the exception of Ohio, where the policy does not provide workers compensation insurance. The states are to be listed in the Schedule. Use the Ohio Employers Liability Coverage Endorsement (WC B) to afford employers liability insurance in Ohio. 2. The endorsement may be used in a National Council state only if (1) all employees are excluded from the workers compensation law or all employees have elected not to be subject to the law, and (2) there is no state law or regulation making the use of this endorsement illegal. (See the Basic Manual User s Guide- Reference Tables.) Lesson 2 Topic F Endorsements p4 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Longshore and Harbor Workers' Compensation Act Coverage Endorsement WC A Certain employees are governed by the Longshore and Harbor Workers' Compensation Act, which mandates special coverage for land-based employees who work on navigable waters or on ways adjoining navigable waters, wharves, piers, docks, and perhaps bridges. These benefits are much higher than those typically included in state workers compensation laws. Typical employees include workers in maritime employments including longshore, harbor workers, shipbuilders, ship breakers, and ship repairers. The act does not apply to masters or crewmembers of vessels. Examples of navigable waters are waters used for navigation or commerce between states or ocean and seas that border the United States (Mississippi River, Ohio River, Great Lakes, Intercoastal Canal, Houston Ship Channel). This endorsement is used to provide workers compensation insurance and employers liability insurance for work subject to the act. Click here to see a copy of this endorsement WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC A 2nd Reprint Effective April 1, 1992 Standard LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT COVERAGE ENDORSEMENT This endorsement applies only to work subject to the Longshore and Harbor Workers Compensation Act in a state 104

26 shown in the Schedule. The policy applies to that work as though that state were listed in Item 3.A. of the Information Page. General Section C. Workers Compensation Law is replaced by the following: C. Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Longshore and Harbor Workers' Compensation Act (33 USC Sections ). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two (Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Longshore and Harbor Workers' Compensation Act. This endorsement does not apply to work subject to the Defense Base Act, the Outer Continental Shelf Lands Act, or the Nonappropriated Fund Instrumentalities Act. Schedule State Longshore and Harbor Workers' Compensation Act Coverage Percentage The rates for classifications with code numbers not followed by the letter "F* are rates for work not ordinarily subject to the Longshore and Harbor Workers' Compensation Act. If this policy covers work under such classifications, and if the work is subject to the Longshore and Harbor Workers' Compensation Act, those non-f classification rates will be increased by the Longshore and Harbor Workers' Compensation Act Coverage Percentage shown in the Schedule. Notes: 1. The Longshore and Harbor Workers' Compensation Act is a federal workers compensation law that applies to workers in maritime employments, including longshore, harborworkers, shipbuilders, shipbreakers and ship repairers. It does not apply to masters or crews vessels. See the Basic Manual User's Guide for additional details. 2. Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Longshore and Harbor Workers' Compensation Act in any stale, including a monopolistic state fund state. 3. Coverage is provided in a state by naming the state in the Schedule. 4. The following entry may be typed or printed in the Schedule to provide coverage in Item 3.A. states: "Each state named in Item 3.A. of the Information Page." 5. The following entry may be typed or printed in the Schedule to provide coverage in item 3.A. and 3.C. states: "Each state named in Item 3.A. or 3.C. of the Information Page." 1983, 1991, 2002 National Council on Compensation Insurance. 105

27 Lesson 2 Topic F Endorsements p5 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Outer Continental Shelf Lands Act Coverage Endorsement WC B This endorsement is used to provide workers compensation and employers liability insurance for work on the outer continental shelf. We are generally dealing with employees working on drilling rigs and/or platforms. Click here to see a copy of this endorsement WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC B Effective July 1, 2011 OUTER CONTINENTAL SHELF LANDS ACT COVERAGE ENDORSEMENT This endorsement applies only to the work described in Item 4 of the Information Page or in the Schedule as subject to the Outer Continental Shelf Lands Act. The policy will apply to that work as though the location shown in the Schedule were a state named in Item 3.A. of the Information Page. General Section C. Workers Compensation Law is replaced by the following: C. Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Outer Continental Shelf Lands Act (43 U.S.C Sections a). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two (Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Outer Continental Shelf Lands Act. Description and Location of Work Schedule 106

28 Notes: 1. The Outer Continental Shelf Lands Act makes the Longshore and Harbor Workers' Compensation Act apply to work involving the development from fixed platforms of the natural resources of the Outer Continental Shelf. Use this endorsement to provide workers compensation insurance and employers liability insurance for work on the Outer Continental Shelf subject to the Longshore and Harbor Workers' Compensation Act. 2. The description of the work must show the state whose boundaries, if extended to the Outer Continental Shelf, would include the location of the work. 3. Use the Maritime Exclusion Endorsement or Maritime Coverage Endorsement to exclude or cover the exposure for masters and members of the crews of vessels. Lesson 2 Topic F Endorsements p6 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Maritime Coverage Endorsement WC A This endorsement provides employers liability coverage for employers who have maritime exposures. It applies to bodily injury to a master or crew member of a vessel and the bodily injury must occur in the operation of a vessel sailing directly between the ports of the continental USA, Alaska, Hawaii, or Canada. Click here to see a copy of this endorsement WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC A 3 rd Reprint Effective April 1, 1992 Standard MARITIME COVERAGE ENDORSEMENT This endorsement changes how insurance provided by Part Two (Employers Liability Insurance) applies to bodily injury to a master or member of the crew of any vessel. A. How This Insurance Applies is replaced by the following:: A. How This Insurance Applies This insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death. 1. The bodily injury must arise out of and in the course of the injured employee's employment by you. 2. The employment must be necessary or incidental to work described in Item I of the Schedule of the Maritime Coverage Endorsement. 3. The bodily injury must occur in the territorial limits of, or in the operation of a vessel sailing directly between the ports of, the continental United States of America, Alaska, Hawaii or Canada. 107

29 4. Bodily injury by accident must occur during the policy period. 5. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period. 6. If you are sued, the original suit and any related legal actions for damages for bodily injury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada. C Exclusions is changed by removing exclusion 10 and by adding exclusions 13 and 14. This insurance does not cover: 13. bodily injury covered by a Protection and Indemnity Policy or similar policy issued to you or for your benefit. This exclusion applies even if the other policy does not apply because of another insurance clause, deductible or limitation of liability clause, or any similar clause. 14. your duty to provide transportation, wages, maintenance and cure. This exclusion does not apply if a premium entry is shown in Item 2 of the Schedule. D. We Will Defend is changed by adding the following statement: We will treat a suit or other action in rem against a vessel owned or chartered by you as a suit against you. G. Limits of Liability Our liability to pay for damages is limited. Our limits of liability are shown in the Schedule. They apply as explained below. 1. Bodily Injury by Accident. The limit shown for bodily injury by accident-each accident" is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident. A disease is not bodily injury by accident unless it results directly from bodily injury by accident. 2. Bodily Injury by Disease. The limit shown for bodily injury by disease-aggregate is the most we will pay for all damages covered by this insurance because of bodily injury by disease to one or more employees. The limit applies separately to bodily injury by disease arising out of work in each state shown in Item 3.A. of the Information Page. Bodily injury by disease will be deemed to occur in the state of the vessel's home port. Bodily injury by disease does not include disease that results directly from a bodily injury by accident. 3. We will not pay any claims for damages after we have paid the applicable limit of our liability under this insurance. I of , 1983, 1991, 1995, 2002 National Council on Compensation Insurance. 108

30 WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC A Standard Effective April 1, rd Reprint Schedule 1. Description of work: 2. Transportation, Wages, Maintenance and Cure Premium $ 3. Limits of Liability Bodily Injury by Accident $ each accident Bodily Injury by Disease $ aggregate Notes: 1. Use this endorsement to afford maritime coverage under Program I or II as described in the Basic Manual User s Guide in which the employer has maritime exposure and no Protection and Indemnity policy, or has a Protection and Indemnity policy that does not cover all its operations. 2. Use Item 1 of the Schedule to describe the maritime operations that are to be insured by this endorsement. The description may include limitations by size, ownership or name of vessel and limitations by names of waterways to be used by the vessels. 3. Show a premium charge or other appropriate entry in Item 2 to provide coverage for transportation, wages, maintenance and cure. The premium charge for the exposure shall be determined by the carrier from its evaluation of the exposure presented by the risk. 2 of , 1988, 1991,1995, 2002 National Council on Compensation Insurance, Inc. 109

31 Lesson 2 Topic F Endorsements p7 (2IC) Learning Objective: Describe the uses of specific Workers Compensation Insurance And Employers Liability Insurance endorsements. Foreign Coverage Endorsement Coverage usually applies to employees hired in the United States while traveling or temporarily (90 days or less) residing outside the United States, its territories, possessions, Puerto Rico, or Canada. This endorsement is not standard, but you will typically find two important coverages. Many companies provide foreign workers compensation coverage through specifically designed international policies that better serve the international exposures a business may face. 1. Endemic Disease Endemic disease is covered as a work-related injury/disease. Endemic disease means a disease that is infectious and generally recognized as a health hazard, is restricted to a peculiar locality, and is not caused by or aggravated by the conditions of employment. An example is yellow fever. 2. Repatriation Expenses Coverage also pays for repatriation expenses, which are costs for transporting the injured employee to a medical facility or home. Click here to see a copy of a sample advisory endorsement 110

32 WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC Original Printing Effective November 20, 1987 Advisory FOREIGN COVERAGE ENDORSEMENT Section I. Employees Covered A. This coverage applies only to employees you hire within the limits of the United States of America while they are traveling or temporarily residing outside the United States of America, its territories or possessions, or Canada for a period no longer than ninety days. B. This insurance does not apply to any employees you hire outside the limits of the United States of America. Section 2. How This Insurance Applies This insurance applies only to bodily injury by accident or to bodily injury by disease. Bodily injury includes resulting death. Bodily injury includes any endemic disease. A. An employee included in the group of employees described in ltem I of the Schedule of this endorsement must sustain the bodily injury, and B. The bodily injury must occur in the course of employment necessary or incidental to work in a state, country or subdivision of a country listed in Item 1 of the Schedule of this endorsement, and C. Bodily injury by accident must occur during the policy period, or D. The conditions of your workplace must cause or aggravate the bodily injury by disease. The employee's last day of last exposure to those conditions of your workplace must occur during the policy period. Section 3. Exclusions This insurance does not cover: A. Bodily injury arising from any direct or indirect consequence of war, invasion, act of foreign enemy, hostilities (whether war is declared or not), civil war, rebellion, revolution, insurrection or military Or usurped power, No current or subsequent endorsement to this policy will override or waive this limitation B. Compensation or benefits imposed by any nonoccupational, disability benefits law, plan or any similar law or plan. C. Bodily injury you intentionally cause or aggravate. Section 4. Voluntary Workers Compensation This endorsement amends Section A. of Part One of the policy by adding the following coverage: On your behalf, we will voluntarily pay an amount equal to the benefits you would be required to pay if you and the employees described in Item 1 of the Schedule were subject to the workers compensation law designated in Item 1 of the Schedule of this endorsement. 111

33 WC WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Advisory Effective November 20,1987 Original Printing We will pay those amounts to the persons who would be entitled to them under the law. If this is not possible, we will reimburse you for amounts you are required to pay. The following provisions apply to this insurance: A. In no event will our liability under this section exceed the amount we or you would have been obligated to pay if the employment and injury had been subject to the workers compensation law designated in Item I of the -Schedule of this endorsement. The only exception to this is as provided for in Section 6 - Excess Repatriation Expenses. B. We have the option to request you to pay sums due directly to persons entitled to them on our behalf. We will reimburse you for these payments when you provide us with satisfactory proof of payment. C. Before we are required to make any payment or reimburse you, the persons entitled or paid must: 1. Release you and us in writing from all responsibility for the bodily injury or death. 2. Transfer to us their right to recover from others who may be responsible for the injury or death to the extent of our payment or reimbursement. 3. Cooperate with us and do everything necessary to enable us to enforce the right to recover from others. If a person entitled to payment under this section refuses to accept voluntary payments offered, we may, at our discretion, withdraw the offer to pay compensation benefits. If this happens, we will notify you and the employee that we will no longer be bound by the provisions in this section. D. Under this or any other policy we have issued to you, it is possible that the provisions of a workers compensation law, plan or any similar law or plan may hold you or us legally liable for any injury where payments have been made or would otherwise be made under Section 4 of this endorsement. If this happens, we agree that we will make no further payments under Section 4 if Section 5 of this endorsement applies. Section 5. Legal Liability Under Workers Compensation Law A. If benefits are payable under a workers compensation or occupational disease law of any state, country or subdivision of a country other than the United States of America, its territories or possessions, or Canada, we will reimburse you up to but not in excess of the cost of benefits which would have been payable under the workers compensation law of the state designated in Item 1 of the Schedule of this endorsement, 112